New low-cost telecom technology is creating a major new service industry in Canada. These white-collar jobs are migrating in large numbers from America to newly established Canadian centres.
The term "call centre" is an umbrella description for a wide range of services - including travel reservations, technical support for customer service, customer contact centres, order entry, customer acquisition and retention capabilities, emergency response, online sales and multiple other solutions tailored to the needs of the U.S. customers.
A recent Export Development Canada publication forecasts 800 new call centres will be established in Canada by 2008. This represents a significant increase from the 450 centres operating today.
Large American firms have established their call-centre support north of the 49th parallel. They include Ford Credit, Dell Computers, Lehman Brothers, Neiman-Marcus in Alberta; eBay in British Columbia; IBM and AmeriCredit - a consumer finance company - in Ontario.
This trend will continue. According to the EDC report, a Deloitte Research survey of 100 financial services companies indicates they plan to shift $356 billion worth of operations and about two million jobs to other countries by 2008.
Why should Canada be considered? In order to be sustainable in an ever-increasing competitive global economy, U.S. firms must cut costs. They need suppliers who can deliver a similar level of service at a cheaper rate. As a supplier, Canada does this in spades.
Canadian call centres provide quality service at lower costs. However, the most significant advantages are the similar culture, common language, political and economic stability, lower employee turnover rates, lower payroll taxes and a well-educated workforce.
According to a 2004 KPMG study, Competitive Alternative, Canada's business costs are the lowest of the G7 countries - from five to 20 per cent lower than those offering similar services in the U.S.
Site Selection Canada, which provides consulting services to companies seeking Canadian and U.S. site locations for expansion or re-location, reported that in the 18 months ending Sept. 30, 2003, more than 37,495 customer service-representative positions were created. A further 118 customer-contact centres were established across Canada, with about 98 per cent coming from U.S.-based customers.
So, are we creating "fertile soil" for this wonderful opportunity to take hold? No.
We can do, and must do, much more to compete with the strength of our growing list of competitors - Mexico, India, Malaysia and the Philippines. These countries have lower labour costs and are actively adjusting their economic climate to attract this expanding industry.
We must ask ourselves whether we have the right financial and tax incentive programs to attract companies to Canada. We did this for the movie industry successfully.
Are we investing in the technology and infrastructure needed to support this industry? Our competitors are.
This is not only a big- business story. Small entrepreneurs can undertake strategic thinking about their business activities to determine whether some parts of it can be outsourced.
For example, many small firms find that their accounting, payroll, tax records and T4 slips are fertile ground to be provided outside their operation. The services of call centres in your area will also offer an opportunity to wring pennies out of your value chain.
The test you must apply is if the outsourcing can be undertaken more cheaply while maintaining quality, and you are not passing over your core competencies (the things you do well) to outside organizations, then you should give strong consideration to outsourcing. Your competition is.
In an era of rapid globalization, jobs, like water, will flow where there is the least resistance and the greatest opportunity to "pool" in the best global location.
(Terrance Power is a Wharton Fellow and professor of strategic and international studies with the school of business at Royal Roads University in Victoria. He can be reached at firstname.lastname@example.org)